Planning Your Next M&A Deal? Beware of New California Premerger Notification Requirements

Mergers & Acquisitions (M&A) and other business deals have become more complex as states are adopting their own versions of the federal Hart‑Scott‑Rodino (HSR) premerger notification regime. California is now the third - and by far the largest - state to do so, significantly expanding the compliance landscape for sales and combinations of California businesses.

What Is HSR?

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act) – half a century old, but still going strong – requires parties to certain business combinations to file a notice (an HSR filing) with the Federal Trade Commission and U.S. Department of Justice and give them time (generally 30 days, but more if the regulators want more information) to vet any antitrust concerns. The HSR Act applies to a wide variety of transactions, many outside the usual M&A context, including:

• mergers and consolidations;
• equity and asset acquisitions;
• minority stock positions (equity compensation and finance rounds);
• joint venture formations; and
• grants of exclusive licenses.

Parties must evaluate whether to make an HSR filing if, as a result of the transaction, the acquiror will hold voting securities, assets and/or non-corporate interests of the target with a value above the “Size of Transaction Threshold” (which amount the relevant agencies adjust from year to year for inflation). For transactions closing on or after February 17, 2026, this threshold is $133.9 million so that transactions valued up to that do not require an HSR filing.

California’s New Premerger Filing Obligations

Washington and Colorado were the first to adopt state versions of HSR filing laws (effective July 27, 2025 and August 6, 2025, respectively). California followed last month with Senate Bill 25 (SB 25) which will take effect on January 1, 2027. 

Under SB 25, any party making a federal HSR filing must also submit an electronic copy of that filing with the California Attorney General (AG) if either:

• the party has its principal place of business in California; or
• the party, or a person it directly or indirectly controls, had annual net sales in California of the goods and services involved in the transaction of at least 20% of the Size of Transaction Threshold then in effect.

Additional points to note:

• The California filing must be submitted within one business day of the federal HSR filing.
• Unlike the case with the HSR Act, SB 25 has no waiting period. Thus, the transaction may close even if the AG is still reviewing.
• The AG must keep all submissions confidential, but can share the filing with other states that have substantially similar premerger notification laws.
• The AG can charge a modest filing fee.
• Penalties are up to $25,000 per day for non-compliance.
• Businesses and practitioners expect the AG to issue guidance on implementation and filing procedures.

What Are the Practical Implications of SB 25? 

Parties to a transaction should assess California and other state versions of HSR filing obligations as soon as they confirm they have a federal HSR-reportable deal.

California’s substantial economy means SB 25 is likely to have a far broader impact than similar laws in Washington or Colorado. Companies with substantial California operations or California-sourced sales may face greater antitrust scrutiny of their deals moving forward.

Parties should be prepared to advocate directly with attorney general offices (or comparable agencies) where a transaction could potentially have an adverse impact on state-specific competition.

What’s Ahead?

California is the third and most significant state so far to adopt a premerger filing law. Other jurisdictions, including New York, Hawaii, Indiana, West Virginia and Washington D.C., are considering similar measures, signaling a growing trend toward local merger oversight.